Canada: Current account deficit likely widened sharply in Q3 – BMO CM
According to Benjamin Reitzes, Macro Strategist at BMO Capital Markets, Canada’s current account deficit likely widened sharply in Q3, driven largely by a huge deterioration in the merchandise trade deficit.
“We’re calling for a $19.5 bln ($78 bln annualized) gap for the quarter with a chance we could challenge 2010Q3’s record nominal deficit. Goods exports fell precipitously, with losses in almost every sector, while the drop in imports wasn’t as steep. The non-merchandise deficit is expected to improve slightly but weakness in the travel account is a downside risk and could push the gap to a record.”
“Our estimate would peg the current account shortfall at around 3.6% of GDP, a more than 1 ppt deterioration from just Q1. While non-energy exports continue to struggle, energy prices perking up of late and the loonie retreating back toward C$1.30 should provide some lift to the goods trade gap and drive a slow improvement in the non-merchandise balance.”